Consumer stockpiling and sales promotions

Arbeitspapier

In retailing markets of storable goods, consumer behavior is typically characterized by stockpiling. While existing research has developed rich models for such strategic consumer behavior, little is known about how sellers should ideally respond to it. In this paper, we provide insights into how frequency and depth of promotions affect consumer purchases and seller revenues in the long run. We show an application to the U.S. market for laundry detergent. We use estimates from a structural dynamic demand model to simulate different pricing policies and find that in the detergent market, an increase in promotion depth is more effective than a change in promotion length. Our results suggest that this finding can be translated to markets with a large heterogeneity in storage costs and steady consumption rates.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1680

Classification and Topics

• Classification: Wirtschaft ; Marketing ; Firm Behavior: Empirical Analysis ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: Promotion ; Frequency ; Depth ; Stockpiling ; Storable Goods

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lu, Anna
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/168458
• Last update: 10.03.2025, 11:43 AM CET